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Penny stocks refer to the stock of publicly listed companies that are very small.
Typically, a business is placed into the “penny” category if its share price is less than £1 and its total market capitalisation is under £100m.
As a risk-seeking investor looking to maximise my returns, I tend to be on the lookout for good penny stocks. The reason being that some of them offer huge upside potential, provided I’m comfortable taking on the higher risk.
With that in mind, I’m sharing two of my favourite penny stocks currently on the market. For the reasons outlined below, I reckon they’re among the best I could buy for my portfolio today. Let’s take a look.
How to reinvigorate a fading brand?
Superdry (LSE:SDRY) is a fashion company that designs, produces, and sells clothing, footwear, and accessories under its own brand.
It operates approximately 220 physical stores and 479 franchises and licenses in 53 countries worldwide.
Since the beginning of 2018, the shares have had a terrible time. In fact, they’ve lost around 96% of their value, which is abysmal.
As a result, Superdry shares trade for around 78p as I write.
The woeful share price performance is largely thanks to falling profits over the years, with many blaming the brand’s fading popularity.
This represents a critical challenge for Superdry as reinvigorating a brand is notoriously difficult.
That said, I’m pleased with the company’s commitment to restore the brand to a premium position by focusing on delivering quality, style, and sustainability at value.
In 2022, bosses introduced a ‘Brand Heat’ KPI measuring Superdry’s resonance among customers.
Reassuringly, the company saw an increase of 3% year on year, which indicates to me that plans to rejuvenate the brand are working.
As a result, if I had some cash to spare, I’d happily hoover up some Superdry shares for my portfolio and hold them for the long term.
A small company with huge potential?
Woodbois Ltd (LSE:WBI) is forestry and timber trading company. It owns and operates a collection of sawmills and veneer factories based in Africa.
The firm’s unique operating procedures place a big emphasis on sourcing materials sustainably through reforestation. As a result, the group is currently the eighth-most sustainable timber supplier worldwide.
That’s despite the company coming in with a market capitalisation of just £9.57m.
However, ongoing geopolitical and macroeconomic uncertainties represent the key risk for Woodbois.
Further instability could harm the company’s ability to generate consistent, positive cash flows, which is something I’ll be watching out for closely.
That said, I’m happy that the business expects total revenue for full year 2023 to exceed 2022’s revenue. This is largely thanks to a focus on margins and profitability.
I’m also encouraged by the Woodbois’ expectation to deliver further growth in profitability and to achieve positive operational cash flow during 2023.
Consequently, at 0.4p, I reckon Woodbois is one of the best penny stocks I could buy for my portfolio today. If only I had some cash to spare!
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